Howell, D. v Bostaran P/L

[1994] FCA 504

JUDGMENT No. . S!??, %

BETWEEN: -

Applicant

Am: -

First Respondent

l3xuuau

Second Respondent

-

Third Respondent

J5NAI-p-SF. D1 F U E W

Fourth Respondent

-

Fifth Respondent

On 28 April 1994, I published reasons for judgment in this matter and ordered that counsel bnhg in, within 14 dam minutes of the orders which they proposed.
GXaU:	Davies J.
R@:	28 June 1994
ZkG	Sydney

L

Subsequently, I have been addressed briefly on the issues which remain

outstanding. In general, I agree with the revised figures put forward by Mr J.P.

Hamilton QC, senior counsel for the applicant. Those figures are as follows:-

Purchase price $25O,OOO

M: Value of chattels (J 27)	u&&l
Balance	236,337
M: Price received by applicant

for chattels sold (JB 433)	u!?Q
Balance	232,337

m: Stamp duty on contract of purchase

(without late payment penalty)

(h A) Za9P

Balance $239,577

2	~fmperiodto3(vdlp1	S 21,572
3 h	fm ycar ended W@92	S 9l,144
A	Total	s 3 5 w

the principle enunciated in Hunperfords v. Walker (1990) 171 CLR 125 and the	In addition, Mr Hamilton has sought an award of interest up to the date of trial under
provisions of s.51A of the c 1976 (Cth).

The principal debate between counsel has turned on issues with respect to

interest. The following points were mentioned:-

(i)        To assist with the purchase of the business for $250,000, the applicant,

MS Denise Howell, borrowed $180,000 from Westpac Banking

Corporation.

(ii)       The calculation of the loss for the period up to 30 June 1991 took into account interest paid to Westpac of $23,697.

(iii)      The calculation of the loss for the years to 30 June 1992 should also take acount of the interest paid to Westpac.

(iv)      The calculation of lots for this period which appeared in my reasons of 28 April 1994 adopted an incorrect figure with respect to interest. Indeed, there is an unexplained mathematical error in the calculation of that loss. An additional $7,425 should be allowed in this respect,

making a total of $91,144 which includes interest paid to Westpac of

$34,450.

I would not allow any sum in accordance with the principle enunciated in

Hunperford v. -.	In my opinion, no additional loss has been proved on the
balance of probabilities.	In accordance with the usual practice, I would allow interest

under s.51A of the Federal Qurt of - a Act calculated in accordance with

Schedule J to the Rules of the Supreme Court of New South Wales.

C Stevens QC, senior counsel for the respondents, submitted that to allow interest on the purchase price would involve an element of double counting, for the

Mr

calculations take into account the interest paid to Westpac. However, I do not accept
that contention.

Section 51A provides a means of compensating an applicant for loss in the nature of interest which has occurred but has not been proven on the balance of probabilities. Interest is to be allowed "unless good cause is shown to the contrary". Provisions such as s.514 which do not allow compound interest, may not adequately compensate an applicant for the losses incurred. Huneerfords v. Walker at 149. But s.51A provides a standard guide for cases such as the present where it is uncertain as

to what would have occurred had the transaction, the subject of the proceedings not

been entered into. In my opinion, the section should be applied in the prescnt case

and its application involves no element of double accounting.

Section 51A(2)(a) provides that the section does not "authorise the giving of

interest upon interest or of a sum in lieu of such interest". I do not regard the

upon interest merely because interest was one of the outgoings brought into the	allowance of interest upon a loss actually incurred as being the allowance of interest
calculation of the loss. In the present case, the elements of interest are quite minor figures in the totality of the sums which were taken into account in the calculation of
the relevant losses. Thus, the gross sales for the year ended 30 June 1992 were $402,067, according to the accountant's figures.
Interest should be calculated in accordance with Schedule J to the Rules of the Supreme Court of New South Wales.	Adopting the basis set out in Mr Hamilton's

subahsions, interest of $151,922 will be allowed.

Mr Stcvens also submitted that depreciation should not be allowed as part of the loss as the loss in value of the plant was otherwise taken into account. I agree that depreciation should not be allowed as part of the loss. However, the loss as calculated does not include depreciation. This was intended to be conveyed by the enigmatic sentence in my reasons that "Depreciation ... should be deducted!'

The orders of the Court will accordingly be:-

1.        Judgment for the applicant against the first, second and third respondents for $504,215.

2.         Order that the applicant's obligations under the lease, a copy of which is annexure "U" to the affidavit of Elvio Ravasio sworn 2 April 1993 and

filed in these proceedings, to pay rent and outgoings up to the date of

expiry thereof which are still outstanding be discharged and that the said lease have effect as if it had been so varied.
3.	Judgment for the cross respondent on the cross claim.

4.         Order that the first, second and third respondents pay the applicant's costs of these proceedings.

5.         Direct the Registrar to settle and enter this order forthwith.

I certify that this and the 4 preceding pages are a
true copy of the reasons for judgment herein of

the Honourable M ,	JI"tice Davies.
Associate:
Date:	28 June 1994
Counsel for the applicant:	J.P. Hamilton QC with P. Stone
Solicitors for the applicant:	Snelgrove & Partners
Counsel for the respondent:	CJ. Stevens QC
with P.G. Maiden
Solicitors for the respondent:	Denis Solari, Son & Assaciates
Date of hearing:	24 May 1994
Date of judgment:	28 June 1994